Etsy will cut 220 jobs, about 12 percent of its workforce, as part of a restructuring aimed at reshaping the company for future growth, the platform announced during its second-quarter earnings call. The move comes alongside a 5 percent revenue increase for the first half of the year, a contrast that shows the company’s focus on long-term structural changes rather than short-term cost savings.
CEO Kruti Patel Goyal, who stepped into the chief executive role at the beginning of the year, addressed employees in a companywide memo, acknowledging the apparent contradiction between the layoffs and the company’s improving financial performance. She explained that the restructuring was not based solely on the latest quarter or even the current year, but rather on what Etsy believes its organization must look like in the future. The restructuring will primarily affect product and engineering teams, with the goal of streamlining operations to better align with Etsy’s strategy.
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Sales rose 6 percent in the second quarter, continuing a trend of gradual recovery after years of volatility. Yet Etsy’s leadership has framed the layoffs as necessary to shift from a phase of stabilization to one of sustainable expansion. The company insists the reductions are not tied to AI-driven cost-cutting, though Goyal noted that evolving technology will influence how Etsy develops internal capabilities. She stressed that the workforce reduction was not primarily a cost-cutting initiative and was not being driven by Etsy’s adoption of artificial intelligence. The company is expected to continue recruiting in areas considered important to its long-term strategy, while adapting the way employees collaborate and the expertise it develops internally.
The decision reflects a broader challenge for digital marketplaces balancing growth with identity. Etsy has long positioned itself as a platform for handmade and independent creators, but concerns persist about an increasing volume of mass-produced goods flooding its listings. In July 2024, the company introduced a campaign emphasizing the people behind products sold through its marketplace. More recently, its campaign encouraging consumers to support smaller businesses and independent entrepreneurs was launched around Amazon Prime Day. Yet maintaining that distinction remains critical as competition with larger e-commerce players intensifies.
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Employees in product and engineering teams will receive tailored transition support, including retraining programs for roles aligned with Etsy’s evolving priorities. The company has committed to maintaining open hiring in strategic departments, such as marketing and seller experience, where it plans to invest heavily. Goyal’s memo highlighted that these areas will drive the next phase of growth, as Etsy seeks to deepen its connection with independent sellers and shoppers who prioritize authenticity. The emphasis on selective hiring reflects a deliberate shift away from broad cost-cutting toward building a more agile organization.
